There are significant amounts of unused trade potential in the market, where businesses would like to acquire goods and services of other businesses, but cannot do so because the businesses lack an available medium of exchange (e.g., cash or credit).
There are millions of businesses that have limited cash resources, but that also have other valuable resources and could use the resources of other businesses profitably if there was a way for businesses to acquire each other's resources without the need for cash as a medium of exchange. The ability of businesses to acquire each other's resources without cash is obviously desirable in recessionary times. It can also be useful in times of economic boom for businesses unable to efficiently access traditional cash and credit markets to meet their trading needs, or when businesses are willing to expand, and do have access to traditional credit markets but where credit is costly.
For example, assume Business A needs skilled workers to provide labor but has abundant raw materials for production, and Business B needs raw materials for production, but has idle skilled labor. Both businesses may have limited access to cash as a medium of exchange, but may be able to productively use each other's resources profitably.
In the above simplified exemplary scenario, each of the two hypothetical businesses mutually wanted what the other business had an abundance of and had an abundance of what the other business wanted. In reality however, it is often unlikely that two business would have such an exact match of requests (demands) and offers (supplies), at the same time, and in matching quantities; and even if that were the case, it may be even more unlikely that they would randomly meet in the marketplace at a time when they would simultaneously be interested in executing the trade.
As previously described, it may be unlikely and/or difficult for two businesses to realize and consummate an exact match of requests and offers; however it is possible to provide a framework wherein businesses can each enter their requests and offers. Trade-search engines can then derive and use information from the data entered to find direct and/or indirect matches for requests and offers.
Bartering systems which provide an alternative to using cash as a medium of exchange are known in the art. Businesses which facilitate barter can be highly profitable. There are currently over 350,000 businesses in the United States participating in bartering and cashless exchange activities, with over $10 billion of transactions occurring in worldwide bartering transactions.
Bartering companies, such as ITEX, International Monetary Systems and BizXchange handle millions of dollars in transactions every year with thousands of members worldwide, making bartering an established, recognized and profitable form of commercial exchange.
In bartering systems known in the art, such as ITEX Corporation, International Monetary Systems, Ltd., and BizXchange, the participants trade using a barter currency. The barter currency is a common exchange medium that is used within the barter network, and this barter currency is typically pegged to an established currency, whether US dollars, Euros, or other currency. For example, the barter currency may be pegged to the US dollar, in which case they may be often referred to as “trade dollars”, or “barter dollars.” Each barter system typically has its own centrally issued brand of barter currency. For example, ITEX uses “ITEX trade dollars,” IMS uses “IMS trade dollars,” and BizXchange uses “BizX trade dollars.”
One issue with current bartering systems, however, is the need to control inflation within the system and the dilution of issued trade dollars in circulation. Inflation within traditional barter systems is therefore centrally controlled by a bartering system administrator, acting as a third-party which regulates the issuance of the barter currency.
Another issue with current bartering systems is the third-party control of available exchange media in circulation. In current systems known in the art, the amount of exchange media in circulation is not necessarily directly driven by market demand. Rather, the amount of exchange media in circulation is determined by the third-party issuer of exchange media and may, in part, be based on a subjective assessment of the market demand.
It desirable to have a system and apparatus in place which allows businesses to exchange each other's resources in a free and liquid manner without a necessary requirement that the businesses possess a common exchange media, but rather are able to use the businesses' own privately-issued trade-credit to exchange for other businesses' privately-issued spendable trade-credit.
It is desirable to have a system that does not require a third-party to issue exchange media into circulation (e.g., cash, barter currency, or privately issued trade-credit) for trade transactions to occur, but which instead, in addition to allowing businesses the ability to trade using exchange media issued by third-parties, allows businesses the ability to trade using their own privately-issued trade-credit.
It is desirable to have a system wherein the inflationary potential inherent in current barter systems becomes self-balancing and constrained by market forces, without requiring that a third-party administrator directly manage the issuance of exchange media into circulation.
It is desirable to have a system which can decrease businesses' dependence on traditional financial institutions as sources of financing by providing alternative and complementary types and sources of business credit.
It is also desirable to have a system and apparatus which can increase businesses' potential customer base for participating businesses by encouraging alternative forms of payment.